Management

4 Telling Signs That Your Business Has Hit A Ceiling [Interview]

These 4 indicators will tell you when you need to overhaul the systems within your business in order to get to the next level.

Kevin Kononenko on July 6, 2017 • 11 minute read

Perhaps you started your business for increased flexibility in your life. You wanted to be your own boss and make your own rules.

Or, maybe you want to build a large enterprise with thousands of employees in a quest to revolutionize your industry.

Whatever the reason, you have probably found that systems from the early days of the business do not scale up. When you try to add new customers or users, you find yourself working brutal hours to support the new growth. And, there is no end in sight. This is not what you signed up for.

I spoke with Marisa Smith, a professional implementer for the Entrepreneurial Operating System® (EOS) framework. EOS provides a comprehensive system for finding and removing the bottlenecks in your business. It looks at the 6 Key Components of a Business– People, Vision, Data, Issues, Process and Traction-  and helps businesses discover which ones need to be strengthened in order to grow. Businesses of all types bring EOS Implementers like Marisa in to find bottlenecks and update their internal systems to prepare for more customers and revenue.

Marisa first tried EOS at the Whole Brain Group, a digital marketing agency that she founded. The process helped her so much that she was able to hand off leadership of the agency, and become a full-time EOS Implementer. The following is a transcript of our interview from June 2017 about common issues that business owners face. It has been edited for brevity and clarity.

Video Summary of EOS System

 

Sign 1- Feeling a Lack of Control Over Your Business

Kevin (K): What is the first common issue that comes to mind?

Marisa (M): I hear from a lot of business owners that feel like they have lost control. They don’t have a grip on the business, it has a grip on them. A lot of people talk about back to back meetings, working on weekends, not being able to get away for a vacation. All the things they dreamed about when they started a business- more flexibility, better control over schedule etc.- are not the reality.

K: How do business owners express this to you?

M: It feels like I am stuck. No matter what we do, we just cannot get to that next level. We feel like we’ve tried everything, but nothing’s working.

They feel like they can’t break through to the next revenue level or number of clients. Typically, when I am saying lack of control, it means:

  • Feeling trapped
  • Lack of flexibility
  • Inability to take vacations without being interrupted by a crisis
  • Spending most of their time engaged in activities they don’t enjoy

Instead, they find that they work 60 hours a week and feel like they can’t go to the bathroom without their phone next to them.

K: When there is lack of control, is there any particular lightbulb moment for these business owners? What triggers for them to actually do something about it?

M: Many of them are so fed up after years of struggle that they are resigned to one of the following scenarios:

  • They feel like they just want to quit. What’s the point? Owning a business is not what they thought it would be.
  • They resign themselves to the struggle because that is the life of an entrepreneur.
  • They decide to sell the business or close it down just because they never seem to reach their vision.

That is where I tend to talk to people. They want to stay in the business and love it more, but they don’t know how to get themselves out of the middle of everything without the company collapsing.

K: Is there any one quantifiable thing that will solidify this? Is there a revenue number? Or is it more of a gut feeling, day-in day-out experience?

M: I tend to see more consistent day- in-day-out experience. They are on treadmill and they don’t know how to get off.

K: Do the sentiments trickle down to the employees? Do they get frustrated?

M: Usually, when the entrepreneur is unhappy, everyone is unhappy. That energy permeates the organization. You start to hear people say things like, “What’s the weather today?” In other words, is the boss in a stormy mood, or is it clear skies? That toxicity from the entrepreneur’ unhappiness or frustration has a cascading effect through the organization.

K: How does it get to this point?

M: Everyone has a different path, but a lot of entrepreneurs start their business as a reaction to some organization they were part of. They say, “We never want to have strict processes like that, we do not want people to sit in useless meetings all day.”

That works for three people, but once you get to 15-20, you need to get a little bit of structure in place, or else it’s just chaos. Unfortunately, it’s not always easy to find that happy medium.

Sign 2- Feeling Stuck or Hitting the Ceiling

K: Let’s talk about “feeling stuck”. What does that feeling mean exactly?

M: In general, everything just feels harder than it has to be, and they can’t seem to get to the next level. They might hit their revenue number and go, “God that was hard!” They finally get that project out the door, but they are exhausted. Most business leaders feel like they’ve hit the ceiling because they haven’t been able to master a few leadership abilities.

As you grow, the organization naturally gets more complex because there are more people and more 2-way communication. It’s your job, as the leader, to simplify it, to dumb it down, less is more.

You also need to get better at delegating and recognizing when you need to let go and teach your processes to other people. Most people are terrible at delegating. They want things their way or they are scared to let go. Not only do leaders need to set a good example, but they also need to teach their employees how to recognize when they are at capacity.

Developing the ability to predict is also important. The faster your company is moving, the more you feel like you are reacting. You are standing in the middle of the highway and cars are coming at you from both sides. You need to be able to take the long view. You need to be proactive and prepare for the 3-6 month timeframe rather than reacting to everything that comes at you.

K: It sounds like this is a revenue number or number of employees. Once it crosses that point, you need new processes.

M: You need to simplify, delegate, predict, and systemize. Suddenly, the process that worked at 10 clients does not work when you have 20, or when you go from 100 customers using your products to 1000. Those original processes need to change so that things are done consistently – no matter who is performing the task.

Finally, you need to learn to structure your organization properly. At the beginning, everyone shares all the hats. It’s all hands on deck. The larger you get, the more you need to define who is accountable for what.

K: Is there any lightbulb moment for hitting the ceiling?

M: A lot of people struggle with this for years. They surround themselves with other people that feel their pain and understand them, but don’t know that there could be a better way. If you run into another person who has crossed this barrier, then you might understand that it doesn’t have to be this painful. Unfortunately, a lot of people suffer in silence.

Hitting the ceiling tends to happen every 5 years or so. That is why many businesses do not make it past the 5 year mark. They either figure it out, or they stay the same size forever. Or they go out of business because they can’t make it anymore. If you keep growing, you’ll keep hitting the ceiling every so often, so that’s why it’s so important to develop the ability to simplify, delegate, predict, systemize, and structure.

Sign 3- Inability To Pass on Leadership To Other Team Members

K: Let’s talk about “feeling trapped”. What does that mean?

M: I talk to people that are ready to retire or they want to pass their business to the next generation of leadership, but they can’t figure out how to get the business to the point where they can do that.

Other times, they’ve realized that they’re becoming the bottleneck to their company’s growth. They reach a point where they can’t be in the middle of everything. They can’t manage 37 direct reports. They can’t be the main contact for 30 clients. They also can’t be the one salesperson. It’s time to figure out how to let go and delegate.

Sometimes, the leader is the problem. They have great people who are ready to step up, but the leader is not letting go. Other times, if I ask who is in charge, it is just the owner and here is no leadership team in place.

When you ask the entrepreneur, “Who is in charge of sales?” Answer: “I am”.

“Who is in charge of customer service? “Me”.

It’s time to put a structure in place where others are accountable and they can hand some of this stuff off.

K: In that case, is the person trying to offload the responsibility to others? Or are they not trying?

M: Depends on the person. They might say, “I’m trying to delegate, but people just drop the ball!” Sometimes this is due to a culture where accountability hasn’t been emphasized, but other times it’s because they don’t have the right people in place. Or maybe they weren’t as clear about their expectations as they thought they were. Other times, the one time a team member does something slightly different, the leader snatches the responsibility right back.

Regardless, learning to let go and put the right structure and people in place will do wonders for helping the entrepreneur feel comfortable about getting out of the day-to-day.

Sign 4- Lack of Alignment / Unclear Vision Throughout the Organization

K: I want to cover the concept of having a vision and not reaching it. That is going to vary a lot from business to business. Is that a personal vision, like the way a person envisioned their life after 5 years? Or is it more of a company vision, like I want my business to stand for X, Y and Z?

M: Sometimes, it gets tangled up quite honestly. When they started the business, it was more about the life that they wanted. Now that it has gone beyond that, and there are others involved. They need to find a new vision that compels others to move forward.

That original vision needs to move over and become simply personal. The leadership team needs to develop a company vision. If they want others pushing this vision forward, then they can’t just drop it on team members and say “Here’s the vision, follow it.”

You really have to work together as a team to discover that shared vision. Where can that company be in 5 years? 10 years? That can be hard to pull out of people. They don’t always agree on what it is. Leaders have a hard time getting it onto paper so others can picture it too.

That is one of the biggest benefits of the EOS process: the actual process people go through. You need to get everyone in a room and spend time working on the business so everyone can start to see the same thing. Once you leave the room, people will make decisions based on the same information because they are all headed for the same destination.

When you don’t take time to work on the business, people work at cross-purposes and they never gain traction. People are so busy all the time that they don’t have time to think about the strategy. They are busy maintaining the status quo, not making progress toward a shared vision of success.

EOS helps you simplify, delegate, predict, systemize, and structure so you can break through these 4 barriers.

As a business owner, you are going to hit another ceiling at another pivotal point in the company’s lifetime. And if you learn these skills now, you will be well prepared in 5 years when your revenue or customers plateau again.

About the author
Kevin Kononenko Growth Marketer @ Databox. Making it easy for marketers to tell the story of their success. Everton FC supporter. Startup guy.
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